With the clock ticking, SunCal races to repair image

A long, loud buzzer sounds, and Jim Daisa waits for it to pass. The traffic engineer and urban transportation planner is attempting to lay out the basics of SunCal’s transportation plan for its proposed development at Alameda Point for the dozen or so people who showed up for a meeting in Bladium’s upstairs bar on Wednesday, and even with a microphone, he’s struggling to be heard above the din of the soccer, basketball and hockey contests below.

The get-together is part of a broader outreach campaign the developer has launched in recent weeks to rebuild support for their ambitious Point development plan as the time they have to strike a deal with the city to move forward on the plan runs out.

Even supporters of SunCal’s plan for the Point were turned off by the business proposition and other terms that were laid out in the developer’s Measure B, and they responded by resoundingly rejecting it at the polls. Opponents of the plan have used the results to justify increasingly loud calls for the developer to leave town, and city leaders – who have been vocal about their issues with SunCal – appear poised to consider their demand.

So the developer has gone on the offensive, fighting to keep their plan for the Point alive by working to build support outside of City Hall. They’ve got until July 20, the day their exclusive agreement to strike a development deal with the city, runs out. SunCal wants to build 4,845 units of housing, 4.57 million square feet of commercial and civic space and 146 acres of parks at the former Naval base.

City staff have asked the City Council to decide before then whether they want SunCal to stay, and if so, to extend their negotiating pact. SunCal has said they want to continue to work on the Point, but it’s not clear they will have the support on the council to do so. So they are asking the public to weigh in, in their favor.

At Bladium, SunCal forward planner Nick Kosla casually offers his audience the company’s take on the election results: Voters hated Measure B’s business terms and the end-run it would have done around the city’s planning process – but they love SunCal’s plan.

SunCal’s reps announced in mid-March that they had signed a project labor agreement with unions that had contributed thousands of dollars in campaign cash to defeat Measure B. And this week, the developer cut a $20,000 check to proponents of the Measure E school parcel tax – which moved Mayor Beverly Johnson, who dropped support for Measure B midstream and has been a vocal opponent of SunCal since, to speak SunCal’s praises at a press conference announcing the gift.

They also set up a website and blog to tell their side of the story on the continuing process around the Point and to take community feedback directly on their plan. And there have been advertisements bearing slogans like “Do something, Alameda” and the community meetings.

The developer’s reps even admitted they may have mishandled the election, which they began working to distance themselves from days before the polls opened. SunCal Chief Operating Officer Frank Faye told a crowd of union members in mid-May that the company “may not have touched on all the bases that we should have” as they brought their Point plan to a vote.

Back at Bladium, Daisa explains how new ferry service, high-tech buses in dedicated travel lanes and pedestrian-friendly, high-density neighborhoods will equal less traffic through the Posey Tube than a traditional, single family home subdivision. A ring of easels bearing poster-sized renderings of the transportation options he’s discussing underscore his point. Tables with food, Alameda Point swag and a petition to move forward on the Point development sit at the back of the bar.

Attendees politely ask where the money for the transportation improvements will come from and how the developers plan to handle traffic generated by Point residents who don’t take public transit.

Fortunately for Daisa, the game buzzer downstairs holds off long enough for him to offer his answers.

Answer to the first was that the development would pay for the transit improvements; the second (regarding traffic) was that they will identify the traffic impacts through their environmental impact report process and that they’ll be disclosed, and if they can’t find ways to solve the traffic problems it’ll be up to policymakers (aka the City Council) to decide whether to proceed with the project/phases of the project.

Despite the will of the voters who overwhelmingly rejected Measure B, SunCal just won’t go away. ﻿They are now marketing themselves as “SCC Alameda Point LLC” because they know their image is tarnished in Alameda. Despite SunCal’s false front, the city of Alameda should face up to the facts and stop negotiating with SunCal. Forget all the glowing promises and pretty pictures, here’s the not-so-pretty reality. SunCal…

** Has 30 pending bankruptcies for its joint projects with Lehman;

** Just attempted to file another bankruptcy for its joint project with D.E. Shaw in Albuquerque, N.M. That was dismissed by a bankruptcy court, so now the lender on the project — Barclays Capital, not D.E. Shaw, SunCal’s supposed “financial savior” — is moving to foreclose on this project;

** Gave away its huge project in San Juan Capistrano to the mortgage lender, thereby stiffing that city on bonded improvements promised to the city in return for development concessions;

** Has had a multitude of foreclosures on its projects in Orange and Kern counties;

** Is on trial in Orange County Superior Court for stiffing a bank on a $7.9 million loan guarantee and has already had both its parent company’s and owner’s assets attached for nonpayment on that guarantee;

** Has been sued approximately 100 times by unpaid construction subcontractors.

What is more, in a recent response to a Public Records Act request, the city of Alameda acknowledged that in the last three years the city, its council members and staff have not received any written communication whatsoever from the developer’s supposed financial backer, the secretive D.E. Shaw hedge fund in New York. Shaw is presumed to own 90 percent or more of SCC Alameda Point LLC, and without question is the real driver on this project — yet the city has no communications from them.

In the real business world, as opposed to the world of planners and PR flaks, all this shows that SunCal does not have the financial wherewithal to develop anything at Alameda Point and does not have a reliable partner in D.E. Shaw, either.

Green urban density projects take cash, which this developer does not have, cannot borrow and can no longer obtain from New York investment banks, let alone ordinary commercial banks, large or small, doing business in California.

The “Alameda Point Plan” may please some people, but all of the facts above, concerning the pendency of more than $3 billion in claims against SunCal entities and their owner, shows that the City Council would be profoundly unwise to enter into any further contracts with SunCal/SCC Acquisitions, Inc., its subsidiaries, or any other entity associated with the owners.

We cannot afford to trust a nearly bankrupt developer or a secretive Wall Street hedge fund with our future.

No person at D.E. Shaw & Co., and no entity controlled by D.E. Shaw & Co. have sent any written word to the City of Alameda, in all of 2009 or in 2010, let alone any unconditional written assurances to the City of Alameda concerning the financing of Alameda Point, according to the written response of Alameda’s City Attorney to the well known the public records act request.

What D.E. Shaw has done, according to Reuters news service, through D.E. Shaw’s investment subsidiaries D.E. Shaw Composite Fund and D.E. Shaw Real Estate Holdings, is default on some sort of $15 Million guarantee to Barclays Capital on the D.E. Shaw/SunCal Albuquerque project…which coincidentally just had its foreclosure hearing in New Mexico District Court today, 6/8/10. To read the Reuters story about the default by the D.E. Shaw guarantee go to:

If D.E. Shaw & Co. want this project, they need to step up to the plate and write an unconditional financial commitment to the City of Alameda that they will provide the $1 Billion needed to implement SunCal’s plan, using D.E. Shaw’s OWN MONEY, not borrowed money like they used at the Albuquerque project

I’m sorry a written “commitment” is not enough from the likes of SUNCAL, whose financial resources have many earlier attachments, previous promises and face extensive litigation in court. Performance bonds or the like underwritten and paid for by SUNCAL are a bare minumum. In an amount sufficient to guarantee the construction/funding/production on a guaranted timetable for all of the public amenities promised by SUNCAL.

Re your copied comment to the “Mother Jones” blog piece “Memo to Alameda’s NIMBYs”: According to an earlier Reuters article (www.reuters.com/article/idUSN0519094320100405), Westland DevCo (of which D.E. Shaw and SunCal are limited partners) declared bankruptcy on their Albuquerque project because “disputes among the lenders [Barclays, Five Mile Capital, and a unit of iStar Financial] was making it difficult to negotiate a restructuring. To avoid the uncertainty of litigation, it filed for bankruptcy.” Seems Barclays wasn’t interested in negotiating a restructuring and has now opted to go to court.

ct – You’re missing the point completely. SHAW was supposed to the financial backer on the Albuquerque project and SHAW was supposed to put up the money to buy the site. Instead, Shaw went to a third party lender, Barclays Capital, to borrow the money, and when the project didn’t proceed as planned, Shaw dumped the whole thing and abandoned the project, leaving Albuquerque to deal w/ Barclays et al as its new “neighbor”, plus any and all other fallout.

This is not “financial backing” as most people understand it. Plus the quote you have above should read: “The company said [disputes among the lenders…] — meaing the company as in the developer. What would you expect them to say? “Yeah, we blew this big time”?

Your statement that “when the project didn’t proceed as planned, Shaw dumped the whole thing and abandoned the project” attempts to simplify matters that in reality are a little more complicated: D.E. Shaw and SunCal are limited partners in Westland DevCo. Westland DevCo filed for bankruptcy on their Albuquerque project to avoid the uncertainty of litigation that might’ve resulted from disputes among their lenders (Barclays, Five Mile Capital, and a unit of iStar Financial). The lenders’ disputes were making it difficult to negotiate a restructuring. Barclays didn’t seem interested in negotiating a restructuring and has chosen to litigate instead.

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